How to set up a company in Croatia

Why incorporate a company in Croatia ?

1. First of all, citizens of many states outside of Europe can not purchase and register properties directly in their name in Croatia. Because of no reciprocity agreement between their state and Republic of Croatia. But they can incorporate a local Croatian company which will become a legal proprietor of croatian real estate. There are no limitations for foreign citizens to be members or directors of Croatian companies. There is no need to employ a local Croatian Director. Official listing as a Director of Croatian company does not involve obligatory employment with payment of social taxes.
2. Secondly, if you are planning to purchase real estate with subsequent purpose of renting out, it is far better to do it via Croatian company. You can save 25% VAT purchasing new apartments or houses from a local Croatian developer as it will be reimbursed to your company's account.
3. Thirdly, incorporation may facilitate inheritance process as among your heir can be citizens of different states, including those with no reciprocity. It is much easier for them to inherit shares of a company than a property .

• The simplest legal entity form in Croatia is a company with limited liablity (d.o.o.) with a share capital of 20 000 kn (approx. 2700 euro). In order to inccorporate a company the founders and directors of the future company should get Croatian tax identification number (OIB), determine the distribution of stakes, set the powers of Directors (whether they will take dicisions jointly or separately) and choose name of the company which will have no duplicates in croatian register and ideally should be in Croatian, Greek or Latin. See info how to get OIB - http://www.porezna-uprava.hr/en/Pages/PIN.aspx  Share capital should be placed in a bank or Finance department.

• It is also necessary to choose a legal address for the company. It can be an address of your property or the address of your future accountants' office or advocate's one. The set of documents to found a company is being signed by Directors and Founders at notary public office, official notary fee is a about 600-800 eur depending on complexity of structure, a presence of certified court translator is needed to translate the whole set of documents into your native language (will cost about 200 eur). The personal presence of Directors and Founders is recommended. Otherwise the procedure is quite long and rathe difficult.
  
  
• After signing the set of documents goes to the court for registration. It is registered during a week. After that a company should get it's own Tax number (OIB), statistical number, make a corporate seal and get company account activated. Altogether it takes 2-3 weeks to get all the docs ready. Recently a new simplified procedure for registering Croatian companies had been adopted but it is more applicable for local Croatian citizens who do not need translation od all the documents and have ready-made local addresses. Croatia has got an open register of Croatian companies where any person can see the names of shareholders and directors of the company, it's listed types of activities, share capital, address and other data.
  
  
• It is also possible to open Croatian company with foreign company as a member. In this situation the set of documents needed largelrly depends on jurisdiction of these companies-members. We will provide you with consultation on necessary documentation upon application. Being registered Croatian company should take decision whether it is intereted in entering VAT zone or not. It can enter VAT zone right after registration or in the end of the current year for the next one. Every company in Croatia is obliged to submit accounts and financial reports. If you re in VAT-zone, they are submitted on quaterly basis. If not, they are submitted on yearly basis, every next March for the previous year (till April 1st). The companies can be completely dormant for some period of time but if they own real estate, we would recommend them to have some income of 2000-3000 eur at least per year to avoid any questions of tax authorities. You will need this amount anyway to over utilities and other expenses.
  
  
• If you have reimbursed VAT, then your company should conduct rather active commercial activity to justify such a compensation from the budget. If you do not know Croatian language and are not familiar with Croatian norms of accounting, the only way is not conclude an agreement with a specialized certified Croatian accounting company. A simple company which just owns real estate and does not conduct active commercial acitivity will pay approx. 100 eur per month for accounting services. In top locations of thу seaside like Opatija and Dubrovnik, the fee of accountants may be as high as 200-250 eur per month. Please, take into account that it is not so easy to find an English-speaking or German-speaking accountant and you will certainly need a recommendation of your agent.
  
  
• Please, be advised that your company will pay a small membership fee to Croatian Chamber of Commerce of 55 kn per month and may be subject to slighly higher electricity and water payments per corporate tariffs. You are welcome to get familirized with system of taxation of Croatia: www.porezna-uprava.hr/en/EN_porezni_sustav/Stranice/THE-CROATIAN-TAX-SYSTEM.aspx Incorporation procedure is quite common for our real estate agents and they will advise you on all the details and assist in incorporation process.